Based on economic criteria, a nation should choose a fixed exchange rate if:
A) the monetary authorities are capable of handling shocks.
B) the net benefits of fixing versus floating are positive.
C) the net benefits of fixing versus floating are negative.
D) there is a liberal political agenda that restricts government authority over capital flows.
Ans: A) the monetary authorities are capable of handling shocks.
You might also like to view...
Which one of the following statements about growth theories is CORRECT?
A) In the new growth theory, knowledge is not subject to diminishing returns. B) In neoclassical growth theory, technological progress is the result of rapid increases in saving and investment in capital per person. C) In classical growth theory, real GDP per person is unrelated to the subsistence real GDP. D) In classical growth theory physical resources are unlimited.
The aggregate supply curve:
a. shows the level of real GDP produced in the economy at different possible price levels during a period of time. b. is horizontal in the Keynesian range. c. is vertical in the classical range. d. all of these.